Correlation Between Kimball Electronics and Zepp Health

Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Zepp Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kimball Electronics and Zepp Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kimball Electronics and Zepp Health Corp, you can compare the effects of market volatilities on Kimball Electronics and Zepp Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kimball Electronics with a short position of Zepp Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Zepp Health.

Diversification Opportunities for Kimball Electronics and Zepp Health

-0.42

Correlation Coefficient

Kimball Electronics  Zepp Health

Very good diversification

The 3 months correlation between Kimball and Zepp is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Zepp Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zepp Health Corp and Kimball Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kimball Electronics are associated (or correlated) with Zepp Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zepp Health Corp has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Zepp Health go up and down completely randomly.

Pair Corralation between Kimball Electronics and Zepp Health

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.01 times less return on investment than Zepp Health. But when comparing it to its historical volatility, Kimball Electronics is 2.57 times less risky than Zepp Health. It trades about 0.12 of its potential returns per unit of risk. Zepp Health Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  308.00  in Zepp Health Corp on September 3, 2024 and sell it today you would earn a total of  6.00  from holding Zepp Health Corp or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kimball Electronics  vs.  Zepp Health Corp

Kimball Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kimball Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Kimball Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zepp Health Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zepp Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Zepp Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kimball Electronics and Zepp Health

The main advantage of trading using opposite Kimball Electronics and Zepp Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Zepp Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zepp Health will offset losses from the drop in Zepp Health's long position.

The idea behind Kimball Electronics and Zepp Health Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.